5 Year Review

5 Year Review

Realty International Limited: A Five-Year Review

When Realty International was launched into the global market place in December 2010 the event grabbed attention. Since that time the business model has been intent on taking advantage of the distressed property market, which is firmly a buyers market in recent years. Conversely high-end short-term property has never been in such a high demand.

The early 2000’s credit crunch made little impact on the select property market at the top of the real estate ladder. The rich stayed rich though out the 21st century so far. Globalization has resulted in more of us becoming financially independent in the last twenty years. Enough to create a price surge due to demand. That’s the perfect storm for crowd fund or club purchase success. Upon launch the Companies Act (2006) Memorandum of Articles and Association noted an expected growth 8% per annum. This will reportedly be back up in the future with a five year rolling R.I.C.S. valuation. In reality (no pun intended) the equity from distressed purchases and the value of public rental yields can return as 20% growth per year for organizations of this nature. Prodigy Network, one of Singapore largest clubs of this nature is another good example.

We took a look into the Realty International the company. One of the leading directors of Realty International regarding his operation. Mr. Jelle Elkebout. A Dutch graduate of the Groningen University in Amsterdam. And the managing director of the successful Nest Hotel Chain and Nest Developer Services, a proven investment platform that has just been sold off after maturity returning impressive sums for European investors.

It seems that Realty International has succeeded beyond expectation in its first initial five years of operation. The largest recession in 180 years resulted in investors loosing faith in many alternative sources of investment income and returned to the tried and trusted real estate market. Singapore especially saw a boom in its housing market since 2004. To a point where the Republic’s government has increased stamp duties, sales tax, increased HDB and Private property buy to let and sell- on restrictions from one to four years. These cooling measures have driven the savvy Singaporean investor over seas. Clubs with real property inventory like Realty International are the prefect way for the average Singaporean client who is usually a very busy business person to save on overseas accommodation costs and make a little money at the same time.

How?

Our Club system allows the public to buy rights into the company owning the property. To allow worry free purchase, an Independent Financial Authority holds the deeds to all the properties that the clients monies buy. Once maturity allows the sale of the purchase of properties, the Trust system, independent of the sales or marketing agents returns the monies with the potential for profit. Also, some Realty Access agents this year in early March published net rental yields between 4.3 to 9.2%. This is of course a vast improvement on residential rental yields from the Singapore residential market which averages at 4-3% gross and 2% net. Its minimum buy in of ten company “Subscription” shares is less than the deposit required to mortgage a second buy to let property in this incredibly successful Garden State’.

Minimum buy in is currently $588,000 Singapore Dollars. That is soon to rise after the new financial year’s valuation posted after the 1st of April this year. Double the rental yield and a growth far out stripping the declining local property market there as resulted in a flurry of interest with some bold projects on the table at Realty International. Including proposed new developments in India, China and Brazil. Looking at the initial release price back on the 2nd of January 2011. Investors are reported to have amassed $30,000 Singapore dollars in equity with each Subscription purchased in just five years. That is a growth that the local Singapore market cannot allow to happen for fear of a property bubble burst.

That combined with the lowest management fees locally set as a fixed rate of 3% as published in their Straits Times back in Saturday the 15th of July 2015 and certainly commands respect.

 

 

The average RIET fee charged in the Singapore market was 11% We spoke to Mr Reven, the sales director (of the Asian main agent, Icon Solutions Pte Ltd) with a shining record in both Mediterranean and Asian properties stated, “Singaporeans are smart people. When they see cash returns nearing ten per cent, they are liquidating their bonds and stocks and buying the safest purchase in recorded history, bricks and mortar”. We further asked him to comment on the yearly management fee and how it was kept so low and fixed. He replied, “Simply because R.I. is specifically target to the retail investor. We were not targeting Pension funds and therefore saw no benefit to the investor in listing the company. Listed companies need returns that satisfy shareholders as well as investors. With R.I. our club members reap the rewards solely. That way we command our own niche market”. “The business coming in from China and Brunei is over whelming”. An insider at Realty International said, “the business coming in from China, Malaysia and Brunei is over whelming”.  Icon Solution Pte Ltd is no stranger in the local market. Not only involved with Realty Access but offering Commercial Property investments guaranteeing an 8% return and with buy back schemes firmly in place. They certainly do command respect. Of course, like most funds ruled under British law, (The 2006 Companies Act) Realty international has a finance and security structure.

The Trustee system is supported by Title Trustees. The Asian property arm of Hutchinson and Co Trust Company Limited, still today returning a perfect 100 score on the ‘Delfy Corporate Risk Report’. Making the failure ratio of this organization, 1:176. We will keep an eye on this fund in the next coming five years to see its success is sustained through the next half a decade of boom and crash in the global economy. For now, we have to say that Realty Internationalis pioneering a success that other even more established finance houses in Singapore are now catching up some five years on. Economist (Finance and Economics 6th June 2015 page 56) commented that commercial investments in Airports were returning above average yields. Japan has invested its nations pension funds into airports. Ontario Teachers Pension Plan in the US sated, “We love airports because they pay double digit returns, markedly higher than other assets”. Andrew Clear out continues, “Airports are a dual income monopoly with a captive audience. Airports also have numerous financial levers. Want to increase income? Simply in crease the cost of the parking. It seems that one of the biggest single sources of income is good parking. Seems like a good move on behalf of Icon Solutions. Read the full article here

As with all British companies governed by the Companies Act 2006, Realty International has a finance and security structure.  The Trustee system is supported by Title Trustees, the Asian property arm of Hutchinson  Co. Trust Company Ltd, who, today, are returning a perfect 100 score on the Delfy Corporate Risk Report.  This makes this organisations failure ratio 1:176.  We will be keeping a close eye on this fund over the next 5 years, to see if its success is sustained through the next half a decade of boom and crash in the global economy. An article in the Straits Times on Friday 29th of January. Brian Wee (founder of Fundplaces) and Ku Swee Yong (CEO of Century 21 Singapore) of Media Corp stated that “Property Crowd funding has increased transparency, lowered investment quantum, reduce subscription costs and has built a community of responsible fundraisers”.  Their article continued by stating some of the Asian success stories making the headlines:

“Prodigy Network successfully raised S$243 million to build BDBacata. A 67 storey skyscraper for office and retail commercial potential with a 364 room hotel. One of the largest developers in China, Dalain Wanda Group raised 5 billion yuan for the construction of five Wanda Plaza properties. It took three days to raise the total sum required”! Finally they commented of the report by the World Bank entitled,‘Crowdfunding’s Potential Developing World’. Here the World Bank recognised that we are involved in a future that is changing much faster than it ever was before. Crowdfunding enables investors to diversify their portfolio by investing across several countries and into a wider variety of property types. It goes without saying, that Realty International area pioneering success in Singapore, leaving other, more established finance houses, 5 years behind.

 

 

Source: PropertyRPG
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